Sterling

The Bank of England Monetary Policy Committee minutes from the meeting held on the 5th and 6th of March show that the members voted unanimously to leave interest rates and asset purchases unchanged. Current base rate: 0.50% Asset purchases (QE): £375bn The report highlights the appreciation of Sterling due to safehaven flows due to the escalation of tensions in Ukraine/Russia. The MPC mentioned that Sterling could continue to strengthen if UK growth remains favourabl…

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The UK housing market is regularly covered in the UK press, but there is a significant regional disparity. There has been considerable concern from analysts and the media that the sustained growth in UK house prices, primarily in London, are creating a property bubble. The governments flagship Help-top-buy scheme, providing loan guarantees requiring only a 5% deposit have been criticised for being reckless, and potentially fuelling a UK subprime. However the latest release from the RIC…

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The National Institute of Economic and Social Research released their estimates that output grew by 0.8% in the 3 months ending in February. This is a slight improvement on the estimate for January which believed growth to be at +0.7% for the prevailing 3 months, though this undershoots the pre-recession peak. Interest Rates The NIESR anticipates that the Bank of England will leave rates unchanged at the record low of 0.5% until the Q2 2015. There is concern from some market comm…

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As the 5 year anniversary of the Bank of England cutting interest rates to 0.5%, the bank has announced to leave the base rate and asset purchases unchanged. The current level of asset purchases (QE) remains at £375bn. The 5 year anniversary is a significant length of time for interest rates to be held at the record low of 0.50%. The ultra-loose monetary policy has been highlighted as a risk to the economy by some analysts. Mark Carney’s policy of Forward Guidance headline…

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On Wednesday morning the Office for National Statistics released the UK quarterly GDP growth release that remains unchanged at 0.7%. The release highlighted a positive that the construction industry output increased by 0.2% in the final quarter of 2013, compared to a previous estimate of a 0.3% decrease. The 2013 full year growth estimate is 1.8%, which though significantly below the pre-crisis levels this is a positive economy and something to build upon. The UK economy has begun to s…

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The Bank of England Minutes released on Wednesday, showed that the MPC voted unanimously to keep interest rates at the record low rate of 0.50% and asset purchases unchanged. The BoE base rate has now been at 0.50% since March 2009. In the minutes it said that despite the sharp fall in unemployment, the committee believed that the economy is able to “absorb spare capacity further before raising rates”. The change in focus from the 7% unemployment threshold to reducing the o…

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The inflation rate for the UK fell to below the Bank of England’s target of 2% for the first time since November 2009. Inflation has overshot the 2% target since then, which had been a concern for analysts, who believed the central bank would need to raise interest rates to combat the rise. Mark Carney has now released “Forward Guidance 2.0,” which is focused on the output gap, which last year the BoE said was “unobservable” and “difficult to explain&rdquo…

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The Bank of England governor Mark Carney released the Quarterly Inflation report on Wednesday morning followed by a Q&A session. Key Headlines *Stimulus will need to be exceptional for some time *BOE SEES UNEMPLOYMENT FALLING TO 7% IN QTR THROUGH JANUARY *BOE SEES SCOPE TO KEEP 0.5% RATE AFTER JOBLESS THRESHOLD HIT *BOE SEES CPI 1.7% IN 2Q 2015 BASED ON MKT RATE EXPECTATIONS The full Bank of England Quarterly Inflation Report In the FX market…

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The Federal Open Market Committee concluded their two day meeting on Wednesday and voted unanimously to taper the level of monthly asset purchases by $10bn from the 1st February. At Ben Bernanke’s final meeting, the reduction of asset purchases was split equally between Treasury’s and mortgage-backed securities (MBS). The pace is now expected to continue with a monthly reduction of $10bn as the Fed attempts to wean the US economy from the ultra loose fiscal policy. Some ana…

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The fourth quarter growth figures released by the Office for National Statistics showed that the economy grew by 0.7%, in line with expectations, but slightly below the Bank of England’s projections. Following the release sterling initially weakened against the greenback by around 50 pips, and the subsequently recovered to back above 1.66: Full ONS release. Figures released earlier this morning from the Confederation of British Industry (CBI) reported that the…

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The UK Unemployment rate for December compiled by the International Labour Organisation (ILO) declined to 7.1%, lower than the median estimate of economists of 7.3% and Novembers 7.4%. This is the biggest fall since 1997, the number of out of work dropped by 137,000. The data released by the Office for National Statistics showed that the unemployment rate had dropped to near the Bank of England’s forward guidance threshold of 7%. The BoE had previously highlighted the unemployment rate…

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The Council of Mortgage Lenders December report estimates that gross mortgage lending in the UK was £17bn in December. The CML accounts for roughly 95% of all residential mortgage lending in the UK, so it is the primary barometer. This amount is unchanged from November, but is up 49% since December 2012. House prices in the UK have had wide coverage in the media, as there are concerns that the in some regions the price rises are unsustainable and could be forming a bubble. The capital…

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The Office for National Statistics released the UK December retail sales figures on Friday morning, which were well above analysts’ expectations. These were the strongest UK retail numbers since records began, with GBP bid against all of the majors. UK Retail Sales Data (Dec): Ex Auto (M/M) +2.8% v. +0.3% exp. (prev. +0.2%) Ex Auto (Y/Y) +6.1% v. +3.2% exp. (prev. +2.1%) — Sigma Squawk (@SigmaSquawk) January 17, 2014 This adds pressure on retailers who…

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Mark Carney the Governor of the Bank of England spoke before the Treasury committee on Wednesday. He stated that he wasn’t concerned by the house price rises in the UK and expects the housing market to cool by 2016. The housing market, primarily in the South East, has seen considerable gains with fears of a bubble in pricing emerging. The record low interest rates (0.50%) combined with minimal new supply and increasing demand, has fuelled double digit percent rises per year in some reg…

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UK consumer price inflation (CPI) has slowed to the Bank of England’s target level of 2%, for the first time since April 2006. The December release from the Office for National Statistics showed that CPI had fell from 2.1% in November to 2.0% in December. The Bank of England targets 2.0% inflation, which has been consistently overshot since 2009. CPI is calculated from a basket of goods and services that is meant to represent household expenditure. The largest contributors to the…

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